Correlation Between Mercan Kimya and SASA Polyester

Can any of the company-specific risk be diversified away by investing in both Mercan Kimya and SASA Polyester at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mercan Kimya and SASA Polyester into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mercan Kimya Sanayi and SASA Polyester Sanayi, you can compare the effects of market volatilities on Mercan Kimya and SASA Polyester and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mercan Kimya with a short position of SASA Polyester. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercan Kimya and SASA Polyester.

Diversification Opportunities for Mercan Kimya and SASA Polyester

-0.69

Correlation Coefficient

Mercan Kimya  SASA Polyester

Excellent diversification

The 3 months correlation between Mercan and SASA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mercan Kimya Sanayi and SASA Polyester Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SASA Polyester Sanayi and Mercan Kimya is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mercan Kimya Sanayi are associated (or correlated) with SASA Polyester. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SASA Polyester Sanayi has no effect on the direction of Mercan Kimya i.e., Mercan Kimya and SASA Polyester go up and down completely randomly.

Pair Corralation between Mercan Kimya and SASA Polyester

Assuming the 90 days trading horizon Mercan Kimya Sanayi is expected to under-perform the SASA Polyester. But the stock apears to be less risky and, when comparing its historical volatility, Mercan Kimya Sanayi is 1.3 times less risky than SASA Polyester. The stock trades about -0.28 of its potential returns per unit of risk. The SASA Polyester Sanayi is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  417.00  in SASA Polyester Sanayi on September 23, 2024 and sell it today you would lose (13.00) from holding SASA Polyester Sanayi or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mercan Kimya Sanayi  vs.  SASA Polyester Sanayi

Mercan Kimya Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercan Kimya Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Mercan Kimya is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

SASA Polyester Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SASA Polyester Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mercan Kimya and SASA Polyester

The main advantage of trading using opposite Mercan Kimya and SASA Polyester positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercan Kimya position performs unexpectedly, SASA Polyester can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SASA Polyester will offset losses from the drop in SASA Polyester's long position.

The idea behind Mercan Kimya Sanayi and SASA Polyester Sanayi pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.